1. Technical Field
The present invention relates to Internet transactions and the consequent collection of funds. More particularly, the present invention relates to a method and apparatus for providing an integrated decisioning solution for merchants accepting Internet transactions with processing payments electronically.
2. Description of the Prior Art
While traditional payment systems, such as, for example, gateways with credit cards, continue to dominate the majority of Internet payments, a growing number of payment alternatives has developed. Alternative systems allow merchants to easily receive payments from a variety of sources including, for example, checking accounts, credit cards, lines of credit, and cyber-value.
Large established merchants, such as, for example, Wells Fargo, Card Services International, Bank of America, and Chase, generally use payment gateways and software combination with merchant acquirers to accept credit cards and electronic checks (eChecks) from an Automated Clearing House (ACH).
Medium sized merchants also use payment gateways and merchant acquirers. Some medium and larger sized merchants also accept cyber-value through affiliate marketing programs. For example, Blockbuster and Omaha Steaks accept cyber-value through Beenz, and GiftCertificates.com accepts cyber-value through Yahoo Points.
Smaller sized merchants, auction sellers, and individuals turn to person-to-person (P2P) payment solutions. Most solutions require pre-funding a stored-value account, then initiating payment from the stored-value account. For example, PayPal, YahooPayDirect, and Billpoint use store-valued accounts.
Micro-payment merchants, such as, for example, digital goods, services, and subscriptions, are using payment aggregators to manage transactions over a period of time, and then process and settle at the end of the period. For example, The Wall Street Journal and the New York Times use Q-Pass for billing to credit cards, and Ezone and Hometips.com use e-Charge for billing to phone bills.
PayPal has been dominant P2P payment system for several reasons, cited herein below:                Viral Marketing. PayPal pays new users $5.00 and also pays $5.00 per referral. Originally PayPal paid $10 for new members and referrals but lowered the amount to $5.00 after they acquired over 1 million users. Additional limitations to qualify for the referral fee have been implemented recently by PayPal. To qualify for the referral fee, a consumer has to register as a Business/Premier account or post $50 to the PayPal account via a checking account direct debit. Some auction sellers advertise free items for users using PayPal. The seller can get $5.00 for referrals if the previously mentioned qualifications are met.        Free transaction processing. PayPal previously did not charge individuals to fund the account or to receive money. Recently, PayPal announced a fee increase for their payment services. Free consumer accounts now have limited transaction amounts. If the transaction limit are exceeded, the account is charged based on the Business/Premier account price structure.        Simple sign up and product use. Sign up requires name, address, e-mail address, and a funding source, such as a credit card number or a bank account number. Users can easily request money from any person with an e-mail address. Auction sellers and small merchants can simply add a PayPal button to enable them to accept payments.        Adapts quickly to meet market concerns and opportunities. In response to a few fraud scenarios, PayPal claims that they acted quickly to address system and process deficiencies. For example, PayPal now claims that a PayPal buyer using a credit card is now afforded all of the same rights that a credit card consumer with a dispute is provided. Also PayPal now requires better verification of bank account ownership before transferring money from the bank account via the ACH.        
Although PayPal currently offers certain services for free, they had originally announced plans to make money through several initiatives as cited herein below:                Transaction Fees. PayPal previously provided free limited service to individuals, but charges users for additional features and premium services. See Table A herein below for details.        Credit Card Fees. PayPal, through X.com, claimed that they were going to be offering debit and credit cards to its customers. An X.com credit card would have been as on-us, whereby the issuer, X.com, would have received interchange from the merchant, PayPal. A debit card would have allowed X.com to receive interchange from POS purchases in addition to fees for using ATMs to withdraw cash. Recent management changes at X.com have changed the strategy of the company. X.com had previously claimed that they were going to provide comprehensive financial services however, due to recent management changes the company's strategy will be focused on being a payment provider.        Currency Exchange Fees. PayPal previously claimed that they would provide international payment options with a 1.5% fee for currency exchange.        Float Income. PayPal claims to have a $20 average balance in each PayPal account at any given time.        Banking Revenue. PayPal previously planned to migrate some PayPal accounts to X.com bank accounts with applicable banking service fees.        Brokerage and Other Revenue. PayPal previously had planned to convert some accounts to X.com brokerage accounts with applicable brokerage service fees.        
Table A herein below shows the different types of services provided by PayPal.
TABLE AFree ServicesBusiness/Premium ServicesPremium Service FeesOpen anReceive MoneyApprox. 1.9% plusaccounttransaction feesdepending ontransactiondollar amount.Send MoneyNightly Sweep0.6%Receive MoneyDownload data into ExcelIncluded$100,000$100,000 InsuranceIncludedInsuranceInstant Purchase and automaticIncludedpayment requests for websitesand auctionsAccept unlimited credit cardIncludedpaymentsBatch Payment ServiceLesser of 2% or$0.25/payment24/7 Customer ServiceIncluded
Although many alternative payment solutions have been developed, none of them offers an integrated comprehensive suite of products to address both consumer and merchant demands for safe, convenient, and inexpensive electronic commerce (e-commerce).
It would be advantageous to provide an integrated comprehensive suite of products that addresses both consumer and merchant demands for safe, convenient, and inexpensive electronic commerce (e-commerce).
It would be advantageous to provide an integrated comprehensive suite of products that interfaces with a merchant's Web page seamlessly, as a plug and play product, including allowing for a single-sign on process for the consumer.
It would be advantageous to provide an integrated comprehensive suite of products to address both consumer and merchant demands for safe, convenient, and inexpensive e-commerce that handles transactions based on echecks, as well as credit cards.
It would be advantageous to provide an integrated comprehensive suite of products to address both consumer and merchant demands for safe, convenient, and inexpensive e-commerce that uses a message architecture matching the ACH message to the original transaction.